Pharmaceutical and food companies are losing a combined average of more than $358 million annually due to product spoilage, while the vast majority continue to rely on manual processes for tracking
SANTA CLARA, Calif.–(BUSINESS WIRE)–Cloudleaf, Inc., the leader in next generation digital supply chain solutions, today announced the results of its inaugural State of Supply Chain Visibility report, which revealed that 92% of companies claim they cannot trust the data they have on product traveling through their supply chains. The findings expose decades-old blind spots in supply chains as the root cause of costly problems. This is particularly true for maintaining cold chains, which come with the added challenge of keeping product at a specific temperature throughout its journey to the end consumer. Not only did respondents express major gaps in supply chain visibility, the results uncovered pharmaceutical companies alone are losing between $95 million and $138 million annually on average in medical inventory spoilage due to failures in the cold chain, and food & beverage companies are similarly losing between $71 million and $179 million for the same reasons.
Cloudleaf collaborated with Sapio Research to survey 210 U.S. supply chain decision makers across the pharmaceutical and food & beverage industries between October 19 and November 6, 2020. The goal was to understand their biggest challenges, where product loss is happening in the supply chain (cold chains in particular), and how much it’s costing them. Key findings included:
Other Key findings in supply chain visibility are as follows:
- 92% of total respondents said they could not 100% trust the data coming in from tracking products within their supply chain.
- 99% of respondents in the pharmaceutical industry claimed to be using some sort of manual processes to achieve supply chain visibility.
- Product damage or spoilage (30%), temperature excursions (25%), unexpected delays (24%), lost or misplaced inventory (21%), and compliance issues (20%) are the top 5 current supply challenges plaguing the industry.
- 87% of respondents in the pharmaceutical industry said they do not have 100% visibility into the condition of products in their supply chain during the last mile of delivery.
“The COVID-19 pandemic has made abundantly clear how crucial end-to-end supply chain visibility truly is. The findings of this report illustrate a crippling reality for high value supply chains and cold chains today,” said Mahesh Veerina, president and CEO of Cloudleaf. “A vast majority of companies recognize that the traditional methods of monitoring product as it travels through the supply chain simply do not offer the visibility necessary to ensure quality and compliance. Reliable end-to-end visibility is a capability that cannot be compromised in the highly regulated pharmaceutical and food & beverage industries. At Cloudleaf, we’re dedicated to uncovering these critical visibility blind spots to help minimize waste and get products to the people that need them most.”
The State of the Pharmaceutical Supply Chain
Companies in the pharmaceutical industry rely on a complex global network of suppliers, logistics providers and manufacturing organizations to get their products to the people and patients that need them. The industry also contends with strict regulatory requirements in its supply chains, such as tracking and tracing products, as well as maintaining consistent temperatures while being stored and in transit for optimal safety and efficacy.
Meeting these requirements was cited among the top challenges for the industry, which included:
- Product damage or spoilage (34%)
- Lost or misplaced inventory (28%)
- Temperature excursions (25%)
- Compliance issues (21%); and
- Not knowing the temperature while products are in transit (20%).
These failures along the supply chain impact business outcomes across the entire value chain including, customer experience, order progress visibility, quality, regulatory compliance, inventory levels and patient outcomes.
Addressing these challenges requires a granular view of the flow of products traveling through the supply chain. Unfortunately, the pharmaceutical industry is often lagging in its digital transformation when compared to other industries. In fact, 99% of respondents in the pharmaceutical industry claim to be using some form of manual process to achieve supply chain visibility. 45% said they are using spreadsheets, while 35% said they are using pen and paper, and 27% are using alarm clocks. This means many stakeholders along the supply chain are reporting on issues after the fact and not in real time, which means they aren’t able to take preventative measure. As a result of this lack of visibility, respondents in the pharmaceutical industry reported $95 million on average lost in medical inventory spoilage resulting from cold chain failures. This number jumps to $138 million for companies with 1,000 or more employees, and another 6% of respondents in the pharmaceutical industry reported anywhere from $500 million – $1 billion or more.
“The implications of these findings are significant for their operational and financial impacts as well as the final customer outcomes,” said David Parker, chief evangelist at Cloudleaf. “Food & beverage as well as pharmaceuticals rely heavily on cold chains that are meant to keep products at specific temperatures to maintain their safety, quality, efficacy, and regulatory compliance. Modern digital technologies are rapidly automating visibility and deliver predictive remediation actions using AI/ML to avoid the millions of dollars companies are losing and deliver better experience to their customers.”
The State of Food Supply Chain
The pharmaceutical and food & beverage industries share many of the same challenges: transporting sensitive, perishable goods, and adhering with regulatory requirements to ensure product quality and integrity. They reportedly face similar challenges in meeting these goals as well.
The top challenges reported by respondents in the industry included:
- Product damage or spoilage (28%)
- Temperature excursions (28%)
- Unexpected delays (28%)
- Lost or misplaced inventory (19%)
- Compliance issues (19%); and
- Inaccurate data (19%) – a tie between the last three
79% of respondents in the industry reported they are using some form of manual process to achieve supply chain visibility. 44% said they are using spreadsheets, while 43% said they are using pen and paper, and 27% are using alarm clocks.
The reliance on these out-of-date methods is costing companies – both financially and in their ability to deliver to their end consumer. Almost $71 million on average is lost annually from fresh food spoilage due to cold chain failures. This jumps to $179 million for companies of 1,000 or more employees, and 3% of respondents in the food & beverage industry claimed to have lost $1 billion or more annually from fresh food spoilage caused by cold chain failures.
What’s more, 97% of food & beverage respondents said they have experienced at least some product spoilage during fresh food shipments, contributing to worldwide food insecurity and waste. Lastly, the survey also found a correlation between larger companies and higher risk of greater food waste.
Tracking Soft and Hard Attributes
Cloudleaf’s Digital Visibility Platform addresses these challenges head on by delivering complete end-to-end visibility on the order life cycle and the related physical product flow life cycle by tracking both hard and soft attributes. Tracking both hard and soft attributes eliminates the blind spots that persist in the cold chains today. Hard attributes are traditional attributes such as location, temperature, vibration, humidity, etc. These have traditionally been tracked by companies, though not always in real-time. Soft attributes add critical context to these hard attributes. There are two types of context for soft attributes: (1) business process context such as order life cycle, inventory, payment terms and (2) environmental context, such as weather and traffic conditions. The added visibility soft attribute tracking enables additional granularity to visibility and helps companies unlock capabilities such as faster detection of problems, quicker identification of root cause, and faster resolution, all of which culminate in reduced product loss and efficiency improvements with inventory being in the right place, at the right time and in the right condition.
To learn more about Cloudleaf and to see the full report, click here
About the 2020 State of Supply Chain Visibility Report
Cloudleaf partnered with Sapio Research to survey 200 U.S. supply chain decision makers across the pharmaceutical and food & beverage industries between October 19 – November 6, 2020. The report is meant to highlight critical blind spots in today’s supply chains and shine a light on what’s needed to move forward effectively in 2021.
Cloudleaf powers next generation digital supply chains with insights from ground truth and real-time decision-making. Our SaaS platform leverages hyper-scale cloud, digital twin, AI/ML and IoT technologies to deliver continuous visibility and intelligence. We enable business leaders to make the right decisions in real time to increase revenues, avoid disruptions, deliver better business outcomes, improve customer satisfaction and increase sustainability.